CANADA FX DEBT-C$ pares losses after building permits data

Thu Aug 6, 2009 9:40am EDT
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 * C$ erases bulk of overnight selloff
 * Rally follows upbeat North American data
 * Bond prices little changed across curve
 By Frank Pingue
 TORONTO, Aug 6 (Reuters) - Canada's currency rallied off an
overnight low and was flat versus the U.S. dollar on Thursday
morning as the latest North American data helped support a view
that the worst of the world recession is over.
 The Canadian dollar rose to C$1.0695 to the U.S. dollar, or
93.50 U.S. cents, following data that showed Canadian builders
unexpectedly took out more permits in June than in May as a
rebound in the housing market continued. [ID:nN06293340]
 While not typically a market mover, the data helped fan a
deeply rooted view that the global economy is on the mend and
lifted the domestic currency from an overnight low of C$1.0749
to the U.S. dollar, or 93.03 U.S. cents.
 "Commodity prices and base metals prices still provide the
underlying foundation for the Canadian dollar and any sort of
marginal good news just helps provide some impetus to the
Canadian dollar," said David Watt, senior currency strategist
at RBC Capital Markets. "But it's the general trend in global
sentiment that's the key driver right now."
 Also helping to support risk appetite was U.S. data that
showed the number of people filing initial claims for jobless
benefits fell in the latest week. [ID:nN05350423].
 That report was followed by comments from European Central
Bank President Jean-Claude Trichet, who said he sees a gradual
recovery in 2010. [ID:nFAE005213]
 At 9:20 a.m. (1320 GMT), the Canadian unit was at C$1.0708
to the U.S. dollar, or 93.39 U.S. cents, down from C$1.0701 to
the U.S. dollar, or 93.45 U.S. cents, at Wednesday's close.
 The impact of the latest data will likely be short-lived
and the domestic currency could slip into a tight range ahead
of the marquee monthly jobs data due out on Friday.
 Markets expect Statistics Canada to report net job losses
in July of 17,500, pushing the unemployment rate to an 11-year
high of 8.8 percent. [ID:nN05250302]
 "The market is just on hold for upcoming employment reports
... a more dominant trend will emerge on Friday once we get a
reading on both the Canadian and U.S. jobs reports," said Paul
Ferley, assistant chief economist at Royal Bank of Canada.
 In the previous session, Canada's dollar erased an early
slide and closed higher versus the greenback as hopes for
improvement in the global economy helped to ignite greater
appetite for riskier assets.
 Canadian bond prices pared early gains and were mostly flat
across the the curve, tracking the slide in the U.S. Treasury
and European bond markets after the Bank of England raised its
quantitative easing total to an unexpectedly large 175 billion
pounds. [ID:nL6430949]
 But dealers remained a bit caution ahead of Friday's jobs
figures and that helped to keep prices up a touch after
retreating in the last two sessions.
 The two-year Canadian bond was unchanged at C$99.05 to
yield 1.473 percent, while the 10-year bond gained 8 Canadian
cents to C$101.38 to yield 3.581 percent.
 The 30-year bond rose 20 Canadian cents to C$115.65 to
yield 4.056 percent. In the United States, the 30-year Treasury
yielded 4.564 percent.
 (Additional reporting by by Ka Yan Ng)
 (Editing by Theodore d'Afflisio)